£300,000 Mortgages

In many of the UK’s cities and across the South of England, average house prices are now over £300,000, after rising rapidly in recent years. Since average incomes are increasing at a far slower pace, many buyers are unsure if they can afford a £300,000 mortgage.

Before you start hunting for homes, this article explains important information about mortgages of this size and gives you crucial tips to improve your chances of approval and keep your repayments as low as possible.

We’ll cover topics including…

How much do you need to earn to get a £300,000 mortgage?

A good rule of thumb is that you can usually borrow four to five times your annual income. This means that you would need to earn between £60,000 and £75,000 to get a mortgage of £300,000. Or, if you’re applying for a joint mortgage with your partner, you’d need to be earning combined income of between £60,000 and £75,000.

In certain situations, you might find a lender who’ll allow you to borrow up to six times your income. If that is the case, you’d need an income (or combined income, for joint applications) of £50,000.

Have a look at our mortgage affordability calculator to see how this may work out for yourself, based on your own annual salary:

How much deposit do you need?

You’ll need a deposit of at least £15,000 and likely more. The size of deposit you need is determined by the property value, the maximum loan-to-value (LTV) your mortgage lender offers and personal circumstances such as your credit history.

Most lenders have a maximum LTV of 90%, meaning you can borrow 90% of the property value and you’d need at least a 10% deposit to make up the rest, although 5% deposit mortgages are available under the right circumstances. Some lenders have a lower LTV of 85%, or in some cases 75%, meaning you’d need a bigger deposit.

The table below shows how much you would need as a deposit for a £300,000 property at different LTVs:

Additionally, there are a range of factors that could affect the maximum LTV you can borrow at. For example, many lenders have a maximum LTV of 90% if you’re buying a newly built home and won’t consider offering a 5% deposit mortgage unless you’re applying through a scheme such as Help to Buy. In most cases, this drops to 85% for newly built flats (vs. houses).

How a broker can help you get the best mortgage deal

As you can see, even slight differences between mortgages can have a huge impact on how much you repay on a £300,000 mortgage. That’s why it’s smart to work with a broker who can help you to find the deal that’s right for you. Here are some of the benefits:

Market knowledge

Your broker will know which lenders will only lend you four times your income and which will let you borrow five times your income or more, which helps you to maximise your borrowing. They’ll be able to easily compare rates from every different lender so you can be sure you’re not overpaying.

Personalised advice

Your broker can help you with important decisions, like whether you should choose a variable rate or a (usually slightly higher) fixed rate, or whether you should increase your mortgage term to repay less each month. In some cases, you could secure a much lower rate by adding just £1,000 to your deposit, which your broker can advise you on.

Specialist expertise

If you have a poor credit history or a non-standard income (e.g. you get paid through commission or bonuses), a mortgage broker who works specifically in one of these fields can improve your chances of approval.

Alternatively, if you’re trying to buy a type of property that is in some way unusual (e.g. a listed building or a thatched cottage) a broker who specialises in this property type will be able to help you.

How much will the repayments be on a £300,000 mortgage?

The monthly payments on a £300,000 mortgage will likely be between £1,200 and £1,400. How much your monthly payments are exactly will depend not just on the loan amount but on:

Your mortgage rate

At the time of writing, typical rates available are between 1.42% and 2.79%. For a £300,000 mortgage, this results in monthly payments of between £1,189 and £1,390. The following factors can all affect the mortgage rate you are able to get:

• Deposit size. You’re far more likely to find a mortgage rate under 2.00% if you have a 25% deposit than a 10% deposit.
• Credit history. You’re far more likely to find a mortgage rate under 2.00% if you have a clean credit history than if you have defaults, late payments, county court judgements, or bankruptcy on your credit report.
• Chosen rate type. Variable mortgages typically have a lower starting rate than fixed rate mortgages. However, that rate can increase, whereas fixed rates cannot (within a certain period), which is why these are more popular.
• Initial term length. Most people choose an initial fixed term rate, which is fixed for a certain period (usually 2, 3, or 5 years). A longer fixed term usually has a higher interest rate than a shorter fixed term.

Your mortgage term

Most buyers choose to borrow over 25 years, but you can borrow over a shorter or longer term (up to 40 years). Borrowing for longer means you’ll pay less each month but pay more overall.

Here are some examples:

You can also use our repayment calculator below to see what repayments will be using a different interest rate and term:

Finding the right broker for a £300,000 mortgage

There are thousands of mortgage deals available at any time, so all brokers will know some areas of the market better than others. So, although £300,000 mortgages are common, not all brokers are equal in their ability to find the right one for you.

If you’d like to speak to a broker with experience in this area specifically, try our broker-matching service. Based on your needs, we’ll connect you with the expert we think is right for you for a free, no-obligation chat. To get started, make an enquiry online or call 0808 189 0463.